French fury at VAT restaurant raise

The French hotel and restaurant industry stands to lose "tens of thousands of jobs" under government plans to raise VAT as part of a drive to improve competitiveness, trade representatives warned yesterday.

The reduced VAT rate was introduced in 2009 by former president Nicolas SarkozyPhoto: AFP

The move to increase the rate of VAT charged on restaurant food and hotel accommodation from seven to 10 per cent was dubbed "brutal" by industry figures.

"We've been slapped full in the face," said Roland Heguy, the chairman of the UMIH, France's biggest restaurant trade body.

Customers were likely to foot the extra charges, warned Didier Chenet, head of Synhorcat, the second largest trade body. "It will result in a drop in spending power of the French as prices will go up," he said.

The hikes, which will take effect from 2014, are part of the Socialist government's plan to introduce 20 billion euros (£12 billion) of tax breaks for businesses that will be partly financed by increases in VAT.

Trades bodies claim that every percentage point added to VAT destroyed 10,000 jobs in the sector. "It's clear that a very high number of jobs will be sacrificed in the long run," said Mr Chenet.